As 2019 winds to a close, most organizations are in high gear with year-end activities such as W-2 preparation and reporting. Here are a few best practices your organization can follow to ensure its timely and accurate W-2 reporting.
Balance Prior to Filing
The objective of W-2 balancing is to account for ALL earnings paid PRIOR to filing W-2s with the Social Security Administration (SSA). This includes subtracting earnings and deduction withholding amounts that are considered tax-exempt, from earnings paid to your employees and validating/matching the resulting values against your Federal, State and Local annual returns.
Register Prior to Filing
You MUST have a registered account with SSA in order to process or upload your W-2 file with the Social Security Administration (SSA). Do NOT wait until the day you plan to submit to register, as registration may take up to three weeks. You can register at this site: https://www.ssa.gov/bso/bsowelcome.htm
Test Prior to Filing
If your organization will be filing 250 or more Forms W-2, you MUST file them electronically using an approved electronic media format (for Federal formatting, visit https://www.ssa.gov/employer/EFW2&EFW2C.htm).
Before printing your balanced W-2s, create the W-2 electronic media file and process with AccuWage/AccuW2C software from the SSA website. The AccuWage/AccuW2C software identifies most of the common format errors in wage file submissions. Go to the SSA website for testing your Federal W-2 file: https://www.ssa.gov/bso/bsowelcome.htm You may review file formatting for your individual state by searching the Department of Revenue site for your state.
Review Third-Party Sick Pay Prior to Filing
Employers are required to report total payments of certain sick pay paid by third parties during the calendar year. To ensure your organization’s accurate reporting, follow these steps prior to filing:
- Determine who will file your third-party sick pay W-2s. Some third-party vendors will file on behalf of the employer, when all amounts dispersed to the employees are post-tax (non- taxable).
- Report Third Party Sick pay on a Form W-2. A Form W-2 must be prepared even if the sick pay is non-taxable.
- Check the “Third-Party Sick Pay” box on the Form W-2 ONLY if the amounts were paid by a Third-Party vendor.
- Report taxable Third-Party Sick wages on Form 941 if any taxes were withheld from employee’s payments.
- Combine the sick pay with other wages and produce a single W-2 per employee OR prepare separate W-2 forms for each employee, one reporting sick pay and the other reporting regular earnings.
- Third-Party Sick Pay vendors have until January 15, 2020, to provide payment recap statements for 2019.
NOTE: It’s important to remember employees must be furnished W-2s by January 31, 2020.
For more information regarding W-2s, review IRS Publication 15-A (www.irs.gov).
Got Munis®? Looking for assistance with W-2 preparation for your K-12 district? PSST has a few open appointment times to help your district prepare W-2s with remote assistance. Give us call, 1.800.488.7395.